Is this trading strategy illegal or against some brokers policy?

[running_bare]

LOL

You can tell all the previous replies indicate the posters do not have a clear mind in their belabored waffle, mindless drivel & short of facts BS that is typical of ET.
A+ for BS, E- for actual content that answers OP's qn

Of course it is illegal

These are the facts:
- your INTENTION is to defraud (ie deprive broker causing monetary loss) by taking advantage of the debit balance insurance (broker will eat -ve balances) taking equal & opposite trades using 2 or more 'connected' accounts.

At the outset, net effect is nil.
If & when price explodes in 1 direction, one account will be in the money by a lot, the other position will result in a large -ve balance.
In effect your profit is the amount the broker eats as the loss.

DEFINITION: Fraud is an act or omission made with the intent of making financial or property gain (or causing financial or property loss) through dishonestly making false representations, or dishonestly failing to disclose information where there is a legal duty to do so, or abusing a position of trust.
(ie opening more than 1 account to which you have influence and/or beneficial control. This would be prohibited in the agreement)

- You must not commit fraud by making false representation
(this would be in the agreement)

- You must not commit fraud by failing to disclose information
(this would be in the agreement)

this is getting abit over the top, all i wanted to know was is what i am doing illegal? if so how? the broker has a no negative account policy and the other accounts are traded under dofferent names ex Me and john are friends i tell john "hey john i think the eu/us is gonna go down and john says no its gonna go up so i place my bet to go up and he places it to go down one of us is a winner, how would this be illegal or fraud?

 

[luisHK]

No broker in the world will ask you where the money is from that you intend to fund your account with.

How long since you opened a new brokerage account? Brokers might need a more concise explanation than a bank but they have an "origin of funds" box in their application form afaik.
As of AML laws, without holding any law degree, offering money with criminal origins to an acquaintance doesn't seem enough to launder it so it can't be reclaimed later
Not sure on how the acquaintance could be charged - but pretty sure if Juan ships 10 million USD of cocaine to the US, then Juan gifts this money to his cousin Pedro in Miami who opens a legit business with it, aml charges might arise.

 

[BONECRUSHER]

LOL

You can tell all the previous replies indicate the posters do not have a clear mind in their belabored waffle, mindless drivel & short of facts BS that is typical of ET.
A+ for BS, E- for actual content that answers OP's qn

Of course it is illegal

These are the facts:
- your INTENTION is to defraud (ie deprive broker causing monetary loss) by taking advantage of the debit balance insurance (broker will eat -ve balances) taking equal & opposite trades using 2 or more 'connected' accounts.

At the outset, net effect is nil.
If & when price explodes in 1 direction, one account will be in the money by a lot, the other position will result in a large -ve balance.
In effect your profit is the amount the broker eats as the loss.

DEFINITION: Fraud is an act or omission made with the intent of making financial or property gain (or causing financial or property loss) through dishonestly making false representations, or dishonestly failing to disclose information where there is a legal duty to do so, or abusing a position of trust.
(ie opening more than 1 account to which you have influence and/or beneficial control. This would be prohibited in the agreement)

- You must not commit fraud by making false representation
(this would be in the agreement)

- You must not commit fraud by failing to disclose information
(this would be in the agreement)

I totally agree! Intent is the key word here...all of the posting by the OP in this thread is considered EVIDENCE of his intentions!

 

[volpunter]

You are definitely the biggest tool in this thread:

* the accounts are not connected nor related, in fact they can be with two completely different brokers. If it's done in the same name then no misrepresentation is made whatsoever. Hence no fraud committed. Get your fuxxing facts straight. And yes we are all out there to make a profit at the expense of others losing money. Welcome to the financial industry. What an idiot.

LOL

You can tell all the previous replies indicate the posters do not have a clear mind in their belabored waffle, mindless drivel & short of facts BS that is typical of ET.
A+ for BS, E- for actual content that answers OP's qn

Of course it is illegal

These are the facts:
- your INTENTION is to defraud (ie deprive broker causing monetary loss) by taking advantage of the debit balance insurance (broker will eat -ve balances) taking equal & opposite trades using 2 or more 'connected' accounts.

At the outset, net effect is nil.
If & when price explodes in 1 direction, one account will be in the money by a lot, the other position will result in a large -ve balance.
In effect your profit is the amount the broker eats as the loss.

DEFINITION: Fraud is an act or omission made with the intent of making financial or property gain (or causing financial or property loss) through dishonestly making false representations, or dishonestly failing to disclose information where there is a legal duty to do so, or abusing a position of trust.
(ie opening more than 1 account to which you have influence and/or beneficial control. This would be prohibited in the agreement)

- You must not commit fraud by making false representation
(this would be in the agreement)

- You must not commit fraud by failing to disclose information
(this would be in the agreement)

 

[volpunter]

I opened another IB account in hk just 2 months ago and funded it with several millions (usd). I showed up in person at their office for the mandatory hk validation procedure but at no point did I have to indicate the source of my funds. Not in writing nor verbally.

Money laundering comes only into effect when illicit money enters the financial system by being used to pay for assets or attempted to be used to fund bank accounts. Usually payment processors are only required to verify the funding source at the first point of entry into the financial system. That would be the case if I carried a sports bag full of cash to my broker. However I could transfer millions between my HSBC and JPM accounts without having to indicate the source of funds at all

How long since you opened a new brokerage account? Brokers might need a more concise explanation than a bank but they have an "origin of funds" box in their application form afaik.
As of AML laws, without holding any law degree, offering money with criminal origins to an acquaintance doesn't seem enough to launder it so it can't be reclaimed later
Not sure on how the acquaintance could be charged - but pretty sure if Juan ships 10 million USD of cocaine to the US, then Juan gifts this money to his cousin Pedro in Miami who opens a legit business with it, aml charges might arise.

 

[volpunter]

Bullshit. Did you watch too much crime tv to be so dumbed down. It's not just intention but the intent to do what? He at no point committed a crime. Especially not if he opens two separate accounts at 2 brokers both being in his name. If the broker offers negative account protection and is dumb enough to let others rape him then it's the broker's own stupidity.

I totally agree! Intent is the key word here...all of the posting by the OP in this thread is considered EVIDENCE of his intentions!

 

[BONECRUSHER]

Bullshit. Did you watch too much crime tv to be so dumbed down. It's not just intention but the intent to do what? He at no point committed a crime. Especially not if he opens two separate accounts at 2 brokers both being in his name. If the broker offers negative account protection and is dumb enough to let others rape him then it's the broker's own stupidity.

I based my opinion on a conversation I had with a broker a few years ago. They said shorting against the box was legal as long as the short position was covered first. If this is true, then long and short the same position in split accounts could be interpreted as deceptive. Maybe this only applies to equities and not currencies since currencies are so different compared to equities? You sound like a little boy or a little man with the way you talk to people...calling others idiots or dumb. You don't sound like a man with millions to play with. You don't sound like a professional. You come across as very insecure. I've competed against real men and dominated enough to have respect for myself as well as my competitors. You don't show that respect. Whats the deal? I never disrespect others unless they deserve it. I'm very careful not to be an ass to others because I've gone toe to toe with WARRIORS many times...wouldn't want to give them an edge or extra motivation. Its just weird hearing a millionaire be so condescending. Shouldn't you be more relaxed with all that money?

 

[volpunter]

You are talking about an unrelated issue: Opening 2 separate accounts, one of each with a different broker has never been illegal and will never be illegal. Nor has it been or will it be to go long an asset in account1 and short the same asset in account2.

Has nothing to do with secure or insecure, you are simply factually incorrect. And yes, I show zero respect to idiots, who walk in, are spraying their factually incorrect drool, and leave, and believe they added value. You just confused newbies and others with a topic that has nothing to do with the discussion. What you are talking is being long and short at the same time in the same account which was possible in certain asset classes until it was banned by regulators.

I based my opinion on a conversation I had with a broker a few years ago. They said shorting against the box was legal as long as the short position was covered first. If this is true, then long and short the same position in split accounts could be interpreted as deceptive. Maybe this only applies to equities and not currencies since currencies are so different compared to equities? You sound like a little boy or a little man with the way you talk to people...calling others idiots or dumb. You don't sound like a man with millions to play with. You don't sound like a professional. You come across as very insecure. I've competed against real men and dominated enough to have respect for myself as well as my competitors. You don't show that respect. Whats the deal? I never disrespect others unless they deserve it. I'm very careful not to be an ass to others because I've gone toe to toe with WARRIORS many times...wouldn't want to give them an edge or extra motivation. Its just weird hearing a millionaire be so condescending. Shouldn't you be more relaxed with all that money?

 

[BONECRUSHER]

You are talking about an unrelated issue: Opening 2 separate accounts, one of each with a different broker has never been illegal and will never be illegal. Nor has it been or will it be to go long an asset in account1 and short the same asset in account2.

Has nothing to do with secure or insecure, you are simply factually incorrect. And yes, I show zero respect to idiots, who walk in, are spraying their factually incorrect drool, and leave, and believe they added value. You just confused newbies and others with a topic that has nothing to do with the discussion. What you are talking is being long and short at the same time in the same account which was possible in certain asset classes until it was banned by regulators.

You do realize split accounts can help a trader short a crashing stock. Back in 2008 when the vix was over 80, I had a difficult time getting shares to short so I would continue to place short orders over and over until I was filled. I then placed an order to go long equal shares in a separate account. About 20 minutes before the close the market would selloff like clockwork and all I had to do was close the long position. The shares to short were never available during this volatility so I had to improvise. I did this with SPY as well because shorting SPY at that particular time was a terrible fill compared to just selling SPY. Anyways, I got around the rules and I'm pretty sure it wasn't legal. Please tell me why I couldn't do this in one account rather then two? How come they wouldn't let me do this? Why did they say it was illegal? Were they lying? Shorting and manipulation were frowned upon back then and still are...just wait for the next big decline to hear it all again. This is related to the issue because I thought the sequence of closing out both positions might be the violation... like my experience with my equities broker. And like I said, currencies are a different world so who knows. So what is your opinion about how I used two different accounts in 2008? Sound legal to you? And once again you are a confusing fellow. You care so much about newbies and others getting confused by idiots and yet so quick to put people down. How do you care so much and then suddenly rip people a new one. I'm trying to be nice and not call you anything because I didn't make it clear that I thought the OP's violation could be some other variable. So, to be clear, you are calling me one of the idiots...right?

 

[tysonmoch123]

Guys all i have asked was for some advise and help since i am new and uneducated in this topic, i will give you a better understanding of how i would be trading.

supose there is me and my friend john and we talk everyday we both pick the same currency and do the research together and john says i think its gonna go up and i say its gonna go down so we always bet against eachother now using the leverage i buy 250 which gives me 1 million and john dows the same thing over the weekends, the market opens on monday and it is 0.15+ so john has lost money since he has gone position short and has lost 0.15+ the spread and weekend rollover commision and i have gained that, the next week the same thing happens but the market goes 0.75- which means i have lost my 2500 and my account is not in minus 5000 plus thr fees, the broker has got a policy of no negative balance so u only lose what u have in ur account at the time and john is now made a profit of 7500 - the spread and fees, so in other words john has profited on the second week and has lost on the first week, now the market risk is still there for john and me because if the market opens under 0.25 we lose on spread on both accounts and weekend rollover so shouldnt this be normal? also john has his own credit card that he deposit funds from and places his bets himself but john is always talking to me on regular bases. all i wanna know is this illegal? if it is what would this come up in under their policy?
thank you